A common theme I heard from fellow traders is “it is now low enough to buy”. They said it at $80, and they said it again at $60. And again at $50 and the beginning of the year when the price is at $40s.

However, if we were to look at the chart and see how crude oil break down in June, what justification do we have that this is a good time to go LONG?

From the Ichimoku Daily Chart for /CL, we can see the following:

Since last June, when it breaks support, crude has started on a bearish trend

Towards end December, we saw some consolidation of price. However, is this a bear flag formation ‘in-progress’ ?

From the Ichimoku chart, we can also see that it has hit the Chikou Span resistance twice

The leading kumo continues to shows a huge resistance with no change in trend.

Based on the observation above, there is a high chance that we may see a downward movement towards the $40 next week.